Some big-six publishers refuse to sign new contracts with Amazon

At least two of the big-six publishers are refusing to sign new annual contracts with Amazon. Though that could end with their “buy” buttons being turned off, it is more likely for now that the feud will result in less promotion of their titles on Amazon’s website.

The news was first reported by Salon reporter Alexander Zaitchik. In the middle of a piece on Amazon’s donations to literary nonprofits, Zaitchik wrote:

For the first time, the “Big Six” publishers — HarperCollins, Random House, Hachette, Simon & Schuster, Penguin and Macmillan — have refused to sign Amazon’s latest annual contract. The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost.

Zaitchik told me a “source within the publishing journalism industry” and a contact at a major New York publishing house alerted him to the dispute.

People familiar with the situation confirmed to me that at least two big-six houses have refused to sign new annual contracts — but I have not yet been able to confirm that all six did so. Amazon is still fulfilling customer orders, these sources said, but is not promoting big-six houses’ books on the site or in marketing materials in ways it once did.

Could it really be all six?

The big-six publishers are quite wary at this point of appearing to make any decisions in concert — or even to be seen communicating with one another — because the Department of Justice is investigating five of them for allegedly colluding to set e-book prices. But if Amazon is indeed demanding better terms across the board and if contracts are up for renewal at the same time, it is not surprising that publishers would react similarly.

It is unclear whether all the big-six publishers’ contracts would come up for renewal at once or if they are in different stages of negotiations and/or refusal to sign.

The main source of conflict: Higher co-op fees

Book publishers traditionally paid bricks-and-mortar bookstores co-op fees on print books in order to ensure promotion of those books in stores. The concept is murkier when applied to e-books being sold via websites. Publishers have accepted co-op on e-books as the price of doing business with Amazon, but now the company appears to be requesting much higher co-op fees.

Publishers Weekly first reported in August that Amazon has been asking publishers for a steeper discount and higher co-op payments but it was not clear then whether any of them had refused to sign new contracts.

In February, distributor Independent Publishers Group refused to capitulate to Amazon’s demand for better terms. As a result, Amazon yanked the Kindle versions of IPG’s roughly 5,000 titles. The dispute has not been resolved.

I will update the post as I learn more.

Chris Meadows at Teleread first noted the paragraph in the Salon story. Thanks to Porter Anderson for pointing me to it.